Improving Relations with India Without Compromising U.S. Security

Improving Relations with India Without Compromising U.S. Security

America and India share the distinction of
being the world's largest democracies. Yet relations between the
two countries have been unsteady and will need executive attention
if they are to improve. A major stumbling block to relations in
recent years has been India's testing of nuclear weapons and its
missile development program, both of which threaten regional
stability.

Now,
as part of a program to accelerate economic modernization, India is
seeking U.S. assistance to develop its commercial satellite and
space launch capabilities. Although helping India to improve its
economy and increasing opportunities for U.S. businesses in India
are good foreign policy objectives, history has shown that there
are limits to how far the United States should go in transferring
sensitive technology that could be used in weapons development or
ballistic missile programs.

Washington should not be swayed, either by
rhetoric about India's democracy and its new nuclear power status
or by suggestions of increased trade, into placing India's
interests before U.S. national security concerns. At the same time,
the United States must recognize that India is a great emerging
democracy that is redefining its identity and future goals.1 A new
strategy for improving relations with India should focus on how to
improve regional security by restraining nuclear proliferation and
avoiding technology cooperation that could advance ballistic
missile programs, as well as on how to improve trade.

BALANCING TRADE ISSUES AND SECURITY
CONCERNSDuring a recent visit to Washington, Indian Prime Minister
Atal Behari Vajpayee spoke before the U.S.-India Business Summit,
recognizing that "The United States is today India's largest
trading partner. The US companies are also the largest investors in
India.... We would like to deepen this relationship."2 Building on
this theme when he addressed a joint session of Congress, Vajpayee
said that "In the years ahead, a strong, democratic and
economically prosperous India, standing at the crossroads of all
the major cultural and economic zones of Asia, will be an
indispensable factor of stability in the region."3 Indian
officials have asked for greater cooperation in the field of
satellite technology and space launches.4 Inherent in these remarks is
India's desire to be seen today as strategically important to the
United States.

The
fact that visiting Indian officials urged their American
counterparts to invest in India is not surprising. India's economy
grew slowly after the country gained its independence in 1947. Its
formidable tariff regime and burdensome regulations stifled trade
and economic development. Then, in the 1980s and 1990s, the
government began opening borders to trade and emphasizing economic
growth by increasing exports. India's economy began a steady and
sustainable rise; however, it remains constrained by an average
tariff rate of 27.2 percent.

Today, less than 10 percent of India's
imports come from the United States.5 Over 20 percent of
government revenues are derived from state-owned enterprises,6 such as the
steel, automobile, and aviation industries, with Soviet-like
centrally planned and controlled production lines that are not
attractive to U.S. investors. The manufacturing processes on which
they rely for the most part are obsolete and poorly managed and use
labor inefficiently; they would be expensive to upgrade.

The
U.S. government should not drive American businesses into making
decisions about trading or investing in India that may prove to be
unprofitable. According to the 2001 Index
of Economic Freedom published by The Heritage Foundation and
The Wall Street Journal, India has one
of the world's least free economies, which ranks 133rd out of 155
countries.7 Developing an economy that
draws foreign investors will require India to dismantle its
centrally planned sectors and reduce barriers to trade, such as
high tariffs, in order to become more attractive to foreign trade
and investment.

To
address India's decades-old policy of restricting imports to
maintain a balance of payments, the United States recently sought a
ruling from a World Trade Organization (WTO) dispute resolution
panel. After the panel sided with the United States, India agreed
to lift tariff restrictions on more than 1,400 items. While this
hardly constitutes ideal dialogue, in light of the politicization
of trade and the penchant of both sides in the past to take
unilateral action, the responsible and quiet resolution of this
dispute could herald the development of a more mature relationship
between the world's largest democracies.

Historically, however, U.S.-India trade
relations have long been overshadowed by the two countries'
political and security differences. During the Cold War, relations
were inhibited by India's pursuit of nonalignment and by U.S.
regional security goals that led it to pursue close relations with
Pakistan. Neither side perceived a benefit in developing closer
economic relations; during periods of political or security
tension, programs to aid commerce were either halted or
delayed.

After the Cold War, a new interest in
economic development led New Delhi to seek better relations with
Washington and Washington to reassess its relations with Pakistan
in favor of India. But when India detonated five nuclear weapons in
May 1998, Washington was forced to reimpose economic sanctions, and
mutual mistrust has generally guided engagement since then. Though
most of the restrictions have now been lifted, the grave concerns
that continue to surround India's efforts to gain nuclear weapons
and ballistic missile capabilities make the issue of helping India
develop space launch and satellite capabilities more
problematic.

A Regional Arms Race
India claims that its nuclear and missile development programs are
in part a response to the growing security threat it perceives from
China--an assessment not fully shared by Washington. The United
States believes that Beijing has greater territorial concerns, such
as Taiwan, the South China Sea, and "American hegemony" in Asia,
than border disputes with India. Indeed, the border disputes that
led to the Sino-Indian war in 1962 are the subject of continuing
negotiations, and armed separatist movements in Tibet have not
received India's support for many years.8 Nevertheless, India's
concerns about China's potential threat cannot be simply
dismissed.

Now
that India's long-time rival, Pakistan, also is a nuclear state,
the fact that China is Pakistan's principal source of nuclear
weapons and missiles deeply concerns New Delhi. China believes
Pakistan has the influence needed to defuse Islamic separatist
movements inside China's borders, while it views India as a
strategic rival. Meanwhile, India and Pakistan have sacrificed
significant blood and treasure over the disputed territory of
Kashmir and have even brought their peoples to the brink of a
nuclear abyss in an attempt to resolve the dispute through military
force.

Beijing's proliferation activities with
Islamabad also intensify India's concerns that China is supporting
an arms race in South Asia. China is selling small arms, armor, and
artillery to Burma, which lies along India's borders to the
southeast. Strategic thinkers in New Delhi are concerned that
China's People's Liberation Army could someday gain access to
geographically strategic bases in Burma along the approaches to the
Strait of Malacca, the world's busiest waterway. China already is
building deep-water ports off Burma and overland routes to move
goods to and from these ports, as well as radar and listening posts
in the Coco Islands.

These activities threaten India's
aspirations of becoming a regional power that could project its own
navy in the Indian Ocean and through the Malacca Strait into the
South China Sea.9 Though the United States
should not become embroiled in internecine territorial disputes
between competing regional powers, the free flow of goods through
these sea lanes could be threatened if either India or China gains
naval regional dominance or a naval arms race develops.

For
India, China would be a formidable opponent. A massive country with
a military three times the size of India's armed forces, China has
a nuclear arsenal that far exceeds India's capabilities and enables
it to strike any target within India. By comparison, India's
short-range missiles could not inflict strategically significant
damage within China. Because the border disputes with China and the
arms race with Pakistan are fueling nationalist sentiments and
domestic support for India's nuclear program, New Delhi will likely
continue to seek nuclear weapons with greater destructive power, as
well as longer-range missiles and systems capable of striking
multiple targets.

India's effort to gain U.S. assistance in
developing its satellite and space launch capabilities ostensibly
is meant to help bring India into the 21st century in
telecommunications and commercial enterprise. However, such
technologies could be used to advance India's strategic missile
programs. Privately, in fact, Indian officials have indicated that
New Delhi hopes to develop thermonuclear weapons, multiple
independently targeted reentry vehicles (MIRVs), and
intercontinental ballistic missiles (ICBMs). Moreover, some of
these officials have argued that India needs a "360 degree"
deterrent,10 suggesting that its future
missile programs could target regions other than China.

Such
defense imperatives present a significant dilemma for the United
States, which believes in helping developing countries to improve
their economies. But the technologies used in commercial satellite
and space launches could aid India's strategic missile programs.
Weather satellites could provide data to ensure that ICBMs are
properly aimed, while other satellites could facilitate
targeting.

As
the United States has learned from the inadvertent sharing of
sensitive technology between U.S. companies Loral Space and
Communications, Ltd. and Hughes Space and Communications
International, Inc. and China during commercial space launch
projects,11 helping a country develop
the capability to launch, position, and release satellites for
telecommunications or other purposes is problematic. According to
the congressionally mandated Cox Committee, it "may assist...in the
design and improved reliability of future silo-based or mobile PRC
ballistic missiles...with advanced payloads (that is, multiple
warheads, or certain penetration aids designed to defeat missile
defenses), and submarine launched ballistic missiles."12

The
possibility that this troubling assessment by the Cox Committee
could also apply to India by the sharing of dual-use technology
(technology with both military and civilian applications) is not
small. India's information technology and other high-tech sectors,
including computers and wireless telecommunications, are among its
most creative and the most free from government intervention,
offering U.S. business and U.S. investors the most potential for
return on their trade and investment dollars. The Administration
should ensure that any satellite and space launch activities
between India and American businesses have the same parameters that
the United States imposed on Russia and China, such as
implementation of the National Defense Authorization Act for FY
1999, creation of a satellite licensing authority within the State
Department, heightened requirements for Defense Department
monitoring of foreign launches, and other safeguards listed in the
Cox Committee report.13

Though limits necessarily will be placed
on how far U.S. companies may go in assisting India's space and
satellite launch industries, Washington must ensure the careful
application of export control policies on any dual-use items and
technologies in the satellite and space-launch sectors. U.S.
interests will be served best if India is encouraged to limit its
nuclear and missile programs, to refrain from proliferating missile
technologies, and to reach peaceful negotiated agreements on
territorial disputes.

CONCERNS ABOUT INDIA'S CAMPAIGN FOR
RECOGNITIONIndia is hoping that the United States will support its
efforts to gain a permanent seat on the U.N. Security Council.14 One
motivation for seeking permanent membership in the Security Council
is India's rivalry with China. New Delhi has argued that the two
countries are the most populous in the world; thus, Indian
membership in the Security Council is only proper. China's
permanent seat on the council makes China more powerful
diplomatically than India. New Delhi, on the other hand, is nearly
invisible, or at least the most populous state among many "equals"
in the General Assembly, though occasionally it is able to occupy a
temporary seat on the Security Council.

The
Security Council is indisputably the U.N.'s premier political body.
Nearly every important U.N. decision must originate in or be
approved by the Security Council. The council nominates the
candidates for membership in the General Assembly and for Secretary
General. It also is the only body that can initiate U.N.
peacekeeping missions and impose economic sanctions.15

Expanding the number of members on the
Security Council is not in the best interests of the United States.
Adding new permanent members would increase the complexity and
difficulty of negotiating resolutions and thereby reduce the
Security Council's effectiveness. Gridlock in the Security Council
would be of little benefit to the United States or to India.

Certainly, other countries have strong
arguments for obtaining a permanent seat on the council.16 Japan and
Germany, for example, are major contributors to the U.N. budgets.
Japan contributes $216 million annually and Germany contributes
$104 million, compared with India's annual $350,000.17 Both Japan
and Germany are developed countries and economic powers; India is
neither. In pursuing nuclear capabilities, India hopes to
demonstrate that, despite its economic problems, it is a major
world power and deserves a seat on the council. But acceding to its
demands could encourage other developing nations to pursue nuclear
capabilities as well, if only to use them as leverage in the United
Nations.

Finally, the United States has little
reason to expect India to side with its positions in the Security
Council if it were to become a permanent member. India, which takes
pride in its traditional independent stance, sided with the United
States on U.N. votes in 1999 less than 22 percent of the time. The
Russian Federation, by comparison, voted with the United States 46
percent of the time.18 Among Asian nations, only
China, Laos, Vietnam, Burma, and North Korea voted with the United
States fewer times than did India. A 1997 analysis of U.N. votes
showed that India--the fifth highest recipient of U.S. aid in FY
1997--had voted against the United States at the U.N. an astounding
80 percent of the time, more than any of the top 10 aid
recipients.19

INDIA'S CONTINUING ALLIANCE WITH
RUSSIA
The only permanent member of the Security Council that supports
India's accession is Russia, India's one enduring security ally.
This alliance was forged in 1950 when India signed the
Soviet-Indian Treaty of Peace and Friendship. It was reinforced
when the two states signed a Treaty of Cooperation and Mutual
Friendship in 1971 and when India renewed that treaty with Russia
in 1991. India's relations with the Russian Federation continue to
be based on this strategic partnership and oriented around the
complementary nature of their state-owned heavy industries and
their arms trade.

This
long security relationship means that the vast majority of India's
weapons are either Russian-produced or Russian-designed. Moreover,
India's relationship with Russia is likely to continue under
current economic conditions; India simply cannot afford to make a
major change in suppliers, and Moscow still produces generally
high-quality weapons at low cost. The recent $3 billion arms deal
signed by Russian President Vladimir Putin during a visit in
October demonstrates that New Delhi will likely seek Russia's
assistance in developing nuclear weapons and missile capabilities,
especially if the United States prohibitively limits American
commercial involvement in India's developing space program.

India, however, has begun to move away
from a socialist, centrally planned economy to a more open market
economy, and as it continues to do so, its foreign and defense
policies will change and links to the West will grow. India thus
far has resisted Russia's calls to build a three-way alliance with
China to offset America's international power. India could move
more toward the West as friction with China grows and economic ties
to the United States increase.

Indeed, India has demonstrated an interest
in developing a closer relationship with the United States.
Washington should take this opportunity to foster a meaningful
strategic dialogue with Indian officials about U.S. concerns and
find ways to limit mischief by China and Pakistan in the region.
Such an approach could result in cooperation in such other areas as
antiterrorism and counterintelligence.

ESTABLISHING NEW U.S.-INDIA RELATIONSThe Prime Minister's recent visit to Washington should be
seen as a genuine attempt by both countries to improve relations,
which seemed to bend with every political wind. Despite their
differences, a closer relationship is in both countries' long-term
interests. The United States and India must begin to view
themselves as friendly countries that have complementary, though
not identical, goals.

To
move U.S. policy in this direction, the U.S. government should:

Explain to India
that accelerating its nuclear weapons programs is in neither
India's nor America's best interests. Indian leaders
believe that being a nuclear power makes India a major
international actor that deserves a strategic partnership with the
United States. While it may not be possible to reverse India's
nuclear and missile developments, there are specific steps
Washington can take to limit India's nuclear activities. The United
States should emphasize, for example, that reducing nuclear weapons
and adhering to the Nuclear Nonproliferation Treaty are better
guarantees of security than developing a nuclear deterrent and
provoking an arms race. It should encourage strategic dialogue
between India and China on limiting their nuclear weapons and
aggressively pursue discussions on proliferation with India, China,
and Russia to confine the spread of nuclear weapons. Moreover, the
United States should make clear that a naval arms race to gain
regional control of sea lanes--which could interrupt the free flow
of goods through the area--would be in no one's best interests.

Avoid technology
cooperation that could improve India's ballistic missile
programs. The experience with China in the transfer of
sensitive technology should provide ample lessons that commercial
space launch and satellite business can be used to advance missile
programs. The Administration should consider the recommendations of
the Cox Committee,20 which tend toward limiting
U.S. assistance to India's satellite and space launch sector, and
develop policies to ensure that commercial activity with India in
the satellite and space launch sectors takes place within the same
parameters that the United States has imposed on Russia and
China.

Encourage and
assist India in adhering to WTO standards. Trade is easily
the most neglected facet of the U.S.-India relationship. Although
domestic political forces in both countries are opposed to trade
and globalization in general, developing the relationship between
the United States and India has attracted broad support. Opening up
its economy and increasing two-way commerce will enhance India's
reliability as a democratic partner enormously. However, India
continues to claim developing country status and to demand special
exemptions from the WTO agreement.

At the WTO ministerial meeting in Seattle,
for example, New Delhi criticized the high cost of implementing WTO
measures. Admittedly, some elements of the agreement, such as
protection of property rights and customs regulations, have a price
tag that could be high for an economy of India's size. But the cost
of not implementing the agreement is lost trade opportunities and
cautious foreign investment. The United States should assure India
that investing in its own future is vital and that the WTO
agreement provides the best way to do so. It should demonstrate to
India that improving bilateral trade is among its policy priorities
and that transitory political crises will not be allowed to affect
those relations.

Refrain from getting involved in
internecine territorial disputes between competing regional
powers, such as between India and China or between India and
Pakistan over Kashmir. The United States has little role in
resolving the conflicts over the Northeast Frontier Area and the
Aksai-Chin, territories over which both India and China claim
sovereignty. Pakistan's long-brewing hostility toward India dates
back to the creation of these countries as separate states in 1947.
Pakistan continues to be ruled by a military dictatorship that is
troubled by a rapidly unraveling economy, while India is evolving
as a stable and strong democracy with a reforming economy. Yet
there is no American advantage in taking sides in their conflict
over Kashmir. Correct and sincere neutrality will benefit the
situation as well as U.S. interests.

Explain that
giving India a permanent seat on the United Nations Security
Council is not in America's best interests at this time.
Given the current makeup of the Security Council, India's accession
appears highly unlikely. Therefore, consulting with India on
matters of mutual interest in the long term may bring India into a
closer strategic alignment with the United States and convince its
next generation of leaders to view cooperation with America as more
important to its future stability and relations than the appearance
of independence.

CONCLUSION
India has clearly demonstrated its interest in developing a closer
relationship with the United States. Washington should take this
opportunity to foster a meaningful strategic dialogue with Indian
officials about U.S. concerns, such as proliferation, and to find
ways to limit mischief by China and Russia in the region. Such an
approach could result in better cooperation in both trade and
security in the future.

Larry M. Wortzel is Director of the
Asian Studies Center, and Dana R. Dillon
is a Policy Analyst on Southeast Asia in the Asian Studies Center,
at The Heritage Foundation.

2.Remarks before the
U.S.-India Business Summit at the Hotel Waldorf Astoria in New
York, September 13, 2000.

3.Prime Minister
Vajpayee's Address to the Joint Meeting of the U.S. Congress,
September 14, 2000.

4.Information from a
discussion with Dr. Murli Manohar Joshi, India's Senior Minister
for Human Resource Development, at a meeting at The Heritage
Foundation, June 8, 2000, and with other Indian Cabinet Ministers
in Washington, D.C., that same day.

7.The Index grades each country's economy on
a scale of 1 to 5, with a rating of 1 considered "free" and a
rating of 5 considered "repressed." In the 2001 Index, India received a rating of
3.8, which is classified as "mostly unfree." Ibid. , p. 204.

8.In the 1950s, after
China occupied Tibet, the U.S. Central Intelligence Agency provided
support to Tibetan minority groups opposed to China's control. In
some cases, this support was provided with at least tacit Indian
assistance. Xia Liping and Larry M. Wortzel, PLA Operational Principles and Limited War:
The Sino-Indian War of 1962 (Alexandria, Va.: Center for Naval
Analysis, forthcoming 2001), pp. 3-4. On Indian involvement in
Tibet, see Lowell Thomas, Jr., The
Silent War on Tibet (New York: Doubleday and Co., 1959);
Michel Piessel, The Secret War on
Tibet (Boston: Little Brown and Co., 1972); George N.
Patterson, Tibet in Revolt
(London: Faber and Faber, 1960); Allen S. Whiting, The Chinese Calculus of Deterrence: India
and Indochina (Ann Arbor: University of Michigan Press,
1975).

12.Report of the Select Committee on U.S.
National Security and Military/Commercial Concerns with the
People's Republic of China, U.S. House of Representatives,
106th Cong., 1st Sess., May 25, 1999, Vol. 2, pp. xviii. This
report is also known as the Cox Committee report.

16.Initially, permanent
Security Council membership was given to the victorious allies of
World War II. In 1971, the People's Republic of China took the seat
that had been held by the Republic of China on Taiwan.

17.The fundamental
criterion on which each country's assessments are based is the
ability to pay. This is determined by considering their relative
shares of total gross national product, adjusted to take into
account a number of factors, such as per capita income. United
Nations, Basic Facts About the United
Nations (New York: United Nations, 1998), p. 19.

18.Paolo Pasicolan, U.S. and Asia Statistical Handbook
2000-2001 (Washington D.C.: The Heritage Foundation, 2000), p.
106. These numbers address only contested U.N. votes. The vast
majority of votes in the General Assembly are unanimous.